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INCENTIVE COMPENSATION
 12 Months Ended
Dec. 27, 2020
Share-based Payment Arrangement [Abstract]  
INCENTIVE COMPENSATION INCENTIVE COMPENSATIONThe Company sponsors short-term incentive plans that provides the grant of either cash or stock-based bonus awards payable upon achievement of specified performance goals. Full-time, salaried exempt employees of the Company's U.S. operations who are selected by the administering committee are eligible to participate in the Pilgrim's Short Term Incentive
Plan (“STIP”). Certain full-time, salaried employees of the Company’s Mexico operations are eligible to participate in the Pilgrim’s Mexico Incentive Plan (“PMIP”). The Company assumed responsibility for the Moy Park Incentive Plan dated January 1, 2013, as amended (the “MPIP”) through its acquisition of Moy Park on September 8, 2017. As of December 27, 2020, the Company has accrued $27.9 million, $3.8 million and $2.9 million related to cash bonus awards that could potentially be awarded under the STIP, MPIP and PMIP, respectively.
The Company also sponsors a performance-based, omnibus long-term incentive plan that provides for the grant of a broad range of long-term equity-based and liability-based awards to the Company’s officers and other employees, members of the Board of Directors and any consultants (the “LTIP”). Awards that may be granted under the LTIP include “incentive stock options,” within the meaning of the IRC, nonqualified stock options, stock appreciation rights, restricted stock awards and restricted stock units (“RSUs”). Equity-based awards are converted into shares of the Company's common stock shortly after award vesting. Compensation cost to be recognized for an equity-based awards grant is determined by multiplying the number of awards granted by the closing price of a share of the Company's common stock on the award grant date. Liability-based awards granted under the LTIP are converted into cash shortly after award vesting. Compensation cost to be recognized for a liability-based awards grant is first determined by multiplying the number of awards granted by the closing price of a share of PPC’s common stock on the award grant date. However, the compensation cost to be recognized is adjusted at each subsequent milestone date (i.e., forfeiture date, vesting date or financial reporting date) by multiplying the number of awards granted by the closing price of a share of PPC’s common stock on the milestone date. On May 1, 2019, the Company's stockholders approved the Pilgrim’s Pride Corporation 2019 Long Term Incentive Plan (the “2019 LTIP”), which replaced the expiring Pilgrim’s Pride Corporation 2009 Long-Term Incentive Plan (the “2009 LTIP”). The 2019 LTIP became effective as of December 28, 2019. As of December 27, 2020, we have in reserve approximately 1.8 million shares of common stock for future issuance under the 2019 LTIP.
The following awards were outstanding during 2020:
Benefit PlanAward TypeGrant DateGrant Date Fair Value per AwardVesting ConditionVesting DateIntended Settlement MethodMilestone Date Fair Value per AwardAwards GrantedPerformance
Target
Achievement
Award Adjustment		Awards Forfeited to Date
2009 LTIPRSU3/1/2018$24.93Service(a)StockNA163,764 — (51,473)
2009 LTIPRSU3/1/2018$24.93Performance/Service(b)StockNA217,253 (53,381)(78,449)
2009 LTIPRSU3/1/2018$24.93Performance/Service(c)Cash$19.3566,272 (17,863)(15,235)
2009 LTIPRSU5/10/2018$21.54Service(d)StockNA8,358 — — 
2009 LTIPRSU1/7/2019$16.47Performance/Service(e)StockNA414,620 39,620 (137,413)
2009 LTIPRSU1/7/2019$16.47Performance/Service(f)Cash$19.35109,654 13,705 — 
2009 LTIPRSU4/30/2019$26.91Service7/1/2020Cash$15.12200,000 — — 
2009 LTIPRSU4/30/2019$26.91Performance/Service(g)StockNA470,000 — (470,000)
2009 LTIPRSU5/24/2019$27.86Service(d)StockNA11,170 — — 
2019 LTIPRSU1/8/2020$30.94Performance/Service(h)StockNA195,140 — (33,729)
2019 LTIPRSU1/8/2020$30.94Performance/Service(i)Cash$19.35121,310 — — 
2019 LTIPRSU4/29/2020$22.01Service(d)StockNA13,630 — — 
(a)    The restricted stock units vest in ratable tranches on December 31, 2018, December 31, 2019 and December 31, 2020. Expected compensation cost related to these units totals $2.8 million based on a closing stock price for the Company’s common stock of $24.93 per share on March 1, 2018. Compensation cost will be amortized to profit/loss over the remaining vesting period.
(b)    The restricted stock units vest in ratable tranches on December 31, 2019, December 31, 2020 and December 31, 2021. Expected compensation cost related to these units totals $2.1 million based on a closing stock price for the Company’s common stock of $24.93 per share on March 1, 2018. Compensation cost will be amortized to profit/loss over the remaining vesting period.
(c)    The restricted stock units vest in ratable tranches on December 31, 2019, December 31, 2020 and December 31, 2021. Expected compensation cost related to these units totals $0.6 million based on a closing stock price for the Company's common stock of $19.35 per share on December 27, 2020. Compensation cost will be amortized to profit/loss over the remaining vesting period.
(d)    These restricted stock units were granted to the non-employees who currently serve on the Company's Board of Directors. Each participating director's units will vest upon his departure from the Company's Board of Directors. Compensation cost was recognized in profit/loss upon the grant date.
(e)    The restricted stock units vest in ratable tranches on December 31, 2020, December 31, 2021 and December 31, 2022. Expected compensation cost related to these units totals $5.2 million based on a closing stock price for the Company's common stock of $16.47 per share on January 7, 2019. Compensation cost will be amortized to profit/loss over the remaining vesting period.
(f)    The restricted stock units vest in ratable tranches on December 31, 2020, December 31, 2021 and December 31, 2022. Expected compensation cost related to these units totals $2.1 million based on a closing stock price for the Company's common stock of $19.35 per share on December 27, 2020. Compensation cost will be amortized to profit/loss upon satisfaction of the performance conditions over the remaining vesting period.
(g)    The restricted stock units were cancelled in their entirety by the Company's Board of Directors on December 8, 2020.
(h)    If performance conditions related to the Company's 2020 operating results are satisfied, the restricted stock units vest in ratable tranches on December 31, 2021, December 31, 2022 and December 31, 2023. Expected compensation cost related to these units totals $5.0 million based on a closing stock price for the Company's common stock of $30.94 per share on January 8, 2020. Compensation cost will be amortized to profit/loss upon satisfaction of the performance conditions over the remaining vesting period.
(i)    If performance conditions related to the Company's 2020 operating results are satisfied, the restricted stock units vest in ratable tranches on December 31, 2021, December 31, 2022 and December 31, 2023. Expected compensation cost related to these units totals $3.8 million based on a closing stock price for the Company's common stock of $30.94 per share on December 27, 2020. Compensation cost will be amortized to profit/loss upon satisfaction of the performance conditions over the remaining vesting period.
Compensation costs and the income tax benefit recognized for our stock-based compensation arrangements are included below:
202020192018
(In thousands)
Equity-based awards compensation cost:
Cost of sales$838 $461 $389 
Selling, general and administrative expense1,938 9,671 12,764 
Total cost2,776 10,132 13,153 
Income tax benefit676 2,466 3,202 
Net cost$2,100 $7,666 $9,951 
Liability-based awards compensation cost:
Selling, general and administrative expense$1,081 $671 $— 
Income tax benefit263 163 — 
Net cost$818 $508 $— 
The Company’s RSU activity is included below:
202020192018
Number
Weighted Average Milestone Date Fair Value(a)
Number
Weighted Average Milestone Date Fair Value(a)
Number
Weighted Average Milestone Date Fair Value(a)
(In thousands, except weighted average fair values)
Equity-based RSUs:
Outstanding at beginning of year926 $24.04 1,069 $22.97 389 $18.39 
Transferred to liability-based awards(200)26.91 (36)24.67 — — 
Granted249 28.14 843 22.01 1,114 23.05 
Vested(66)24.93 (723)22.08 — — 
Forfeited(325)25.95 (227)21.51 (434)19.06 
Outstanding at end of year584 $22.12 926 $24.04 1,069$22.97 
202020192018
Number
Weighted Average Milestone Date Fair Value(a)
Number
Weighted Average Milestone Date Fair Value(a)
Number
Weighted Average Milestone Date Fair Value(a)
(In thousands, except weighted average fair values)
Liability-based RSUs:
Outstanding at beginning of year143 $32.97 — $— — $— 
Transferred from equity-based awards200 26.91 36 14.77 — — 
Granted135 29.47 110 16.47 — — 
Vested(211)16.04 (3)26.86 — — 
Forfeited— — — — — — 
Outstanding at end of year267 $19.35 143 $32.97 — $— 
(a)    The milestone date fair value is either the closing price of the Company’s common stock on the grant date for equity-based awards or the closing price of a share of the Company's common stock on the respective milestone date for cash-based liability-based awards (i.e., grant date, vesting date, forfeiture date or financial reporting date).
The total fair values of equity-based awards and liability-based awards vested during 2020 were $2.5 million and $3.0 million, respectively. The total fair values of equity-based awards and liability-based awards vested during 2019 were $14.0 million and $0.1 million, respectively.
As of December 27, 2020, the total unrecognized compensation cost related to all nonvested equity-based awards was $5.1 million. This cost is expected to be recognized over a weighted average period of 1.76 years. As of December 27, 2020, the total unrecognized compensation cost related to all nonvested liability-based awards was $3.8 million. This cost is expected to be recognized over a weighted average period of 1.74 years.
Historically, we have issued new shares to satisfy equity-based award conversions.